In the world of finance, the old adage “if it ain’t broke, don’t fix it,” has been so pervasive that it’s almost become a running joke. Accounting departments are known for being conservative, for avoiding new technology, but in today’s COVID-19 world, the old ways of business are no longer best practice.
Now more than ever, it’s time to automate.
Automation can be terrifying in any industry, but business after business after business has found that automating key processes isn’t the doomsday scenario that many envision. Rather than eliminating jobs or leaving financial professionals twiddling their thumbs, automation frees these same professionals to focus on high-value operations that only a trained, educated human being can complete.
Here are 6 compelling reasons to automate critical financial processes in your business.
1. Free Up Time for High-Value Tasks
One of the biggest fears of many CFOs is that automation is going to lead to their employees spending less time working, period. They feel that the reason they hired these professionals in the first place is to have them work, right? Moreover, many CFOs and Controllers fear that automated accounting processes will capture data incorrectly.
In any business, there are tasks that are high value and tasks that are low value. Those low-value tasks take up the time and energy of your employees that would be better spent on high-value tasks, like forecasting, strategizing, and creating reports for boards or the C-suite that guide organizational strategy for the next quarter, the next year, and beyond.
Essentially, they’re helping the organization figure out where to allocate resources. Without this information, any business strategy is going to be lacking. Financial professionals help CFOs become more valuable to their organization, which, if nothing else, shows your skill to the rest of the C-suite and increases your value.
But more than that, by giving you the tools you need to drive the business forward, those high-value tasks take the 360 view that your employees have of your organization, by the very nature of what they do, and translate them into tasks that ultimately increase revenue.
These high-value tasks that drive business development can only be done with the low-value (yet still critical) tasks being automated, like reconciliations or rolling up of data.
It’s not just the department that will feel this impact either. While automation can create time for value add tasks it can also add value to employees by shifting their roles from record keepers to reviewers. This should also help to alleviate the fear that many CFOs and Controllers have that data might be captured incorrectly.
Automation doesn’t just add value to an organization’s financial department—it reduces the potential for serious problems that ultimately bleed your financial department of resources while helping to develop those resources.
2. Reduce the Potential for Errors
Financial professionals have always run into the same problem that any business that relies on human beings for repetitive processes runs into—the potential for errors.
Whether we’re talking about a manufacturing company or a marketing firm, repetitive processes are a part of any organization, and though they’re boring, they’re almost always critical to success.
Your financial professionals worked hard for their education, and they worked even harder for the valuable experience that they bring to your organization. Is their time really best spent manually entering data into spreadsheets?
If you want a recipe for errors, give these intelligent, hard-working people as many repetitive tasks as possible. If they can spend hours a day listening to music or podcasts because their work is so mindless that they barely have to pay attention, the opportunity for errors to creep into critical processes not only increases, but those errors also cause problems down the road when it’s time combine data or reconcile balances at the end of the month.
By standardizing simple processes and automating redundant accounting tasks like cash journal entries, accruals, and expenses it reduces the risk of a material misstatement.
3. Increase Employee Engagement and Satisfaction
Employees who have spent years on their education and years or decades in the industry want to feel like all their experience and education are valued.
Nothing reduces that feeling like repetitive tasks that make them feel robotic. When employees feel like their time is respected and that they’re spending more time on those high-value tasks that they spend so much time and energy training for and learning, they’re going to be happier and more engaged.
Happier and more engaged employees are going to provide significantly more value to your business, helping you to do those tasks that only you can do.
Automation creates an opportunity for staff to develop their review capabilities in a well-rounded way and allows them to focus on more challenging and thought provoking projects like budgeting, modeling, forecasting, and assisting other departments with more nuanced financial data.
4. Reduce Time Spent on Closing Your Books (and Have Confidence in the Results)
When it comes to time spent on repetitive tasks, closing your books at the end of each month, quarter, and year, is one of the biggest time-sucks there is.
In automating redundant journal entries it frees up employee time to focus on review of GL entries and calculating closing entries. This is especially true for month-end cash reconciliations, which can significantly impact the time required to close books and records.
The same is true for month end accruals or amortization schedules, which are often warehoused in several different spreadsheets.
5. Strengthen Internal Controls to Reduce the Ability to Commit Fraud
Though of course we want to assume that all our employees are honest, the potential for fraud is always present in the world of finance.
When processes are automated, internal controls are strengthened. Employees can’t manipulate books and records that require repetitive entries, and though of course there is the potential for fraud in other areas of the financial arm of your institution, reducing the opportunities for fraud and giving your employees less incentive to do so is always valuable.
And if fraud is occurring, it will be easier to spot. Because closing periods are more streamlined since the system generates the same entries every time, it will become easier to identify irregularities. Your employees will also have more time to review the books and look for potential issues.
Creating a strong internal control environment is at the forefront of many CFOs and Controllers minds. More stringent regulatory oversight and audit testing has created significant pressure for organizations to standardize journal entries, separate duties, and create dual review wherever possible.
6. Reduces Overhead
Back office departments have long been considered cost centers and CFOs have to balance the need for higher overhead with the marginal benefit they receive by acquiring one additional FTE.
Financial Controllers are spending enormous amounts of their time on budgeting and other financial processes—automation reduces that amount of time, allowing finance managers to run more lean departments that can simultaneously focus their efforts on more bespoke activity like financial reporting or compliance.
Furthermore, by automating redundant functions in the accounting process it eliminates the risk of employee turnover and time spent on training new staff. It also creates a more standardized approach to journal entries which can be critical when bringing new staff up to speed or simply closing your books.
Obviously, having a smaller staff is going to translate into huge staffing savings. This direct impact on costs means that your department demonstrates its value and contributes to the bottom line.
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